I would rather have second-rate politicians who know they are duffers than ones who believe they are brilliant.

I am sympathetic with this statement but for a reason that Dillow does not mention. No one is smart enough to try to manage certain complex systems, like the economy. They don't have the information or the ability to set prices, fix (or even correctly identify) "market failures, assess the preferences of 300 million individuals, or any of the other things politicians try to do -- no matter how freaking brilliant they are. Really smart people in politics (or people who think they are really smart) also have a tendency to want to substitute, by force, their judgement and decision-making for my own.

Mole1:

Well, typically, the more people know, the more aware they are of what they don't know. This is well-described in the Dunning and Kruger papers. The intelligent and well-educated people that I know tend to keep their mouths shut about topics they know little about.

Daublin:

I used to think that but no longer.

The most obvious example is university professors. These guys are smart, and their host institutions have promoted them because of it. They are also among the most verbal and talkative people in the whole world. The word "lecture" comes from these guys.

They are frequently very narrow in what they understand, though, which can be very damage when they weigh in on policital issues. In particular, they have no idea about real-world social issues outside of the economy, because their social life consists mostly of students, each other, and political events.

The point is clear, that even though he made billions, Trump could have converted that wealth into index funds, or their equivalent, in 1988, and made far more by 2015 without all that risk and roller-coaster ride.

Even if you take Trump's self assessed $8.7B, that would put him at 770% growth (against the Forbes 1988 estimate - it should be against Trump's apples to apples self assessment for 1988), barely outperforming the S&P 500. And, let's not forget he should be evaluated against a risk weighted return.

"Donald Trump started with nothing"

Now, did he literally start with "zero", like the rest of us average joes might have?

Mark Cuban would be more realistic story of the self made rags to riches story. Trump...hardly.

Better to say that Trump's a genius at branding himself and using the media to his benefit. That arguably has had more impact on his wealth since the 90's than anything - allowing him to put that brand on the table in exchange for equity, and allowing him avoid any direct financial risk (while leveraging OPM - other people's money).

bigmaq1980:

In essence, not my numbers, but 1988 to present (27 years) should be a decent measure. Are you thinking the Black Friday market crash in 1989 is an outlier?

Wonder what the value of his father's company in 1971? If we had those numbers might be interesting.

Even if you assume only $50M, that's a ~10.7% CAGR vs ~7.3% for the S&P 500.

Is 3.4% a good risk premium for that period?

I would assume that Trump's investments were at their riskiest earlier in his life, and one can grant that his brand has been a factor in improving the odds for him since the 1990s. Don't have time to play the numbers, but intuition says that premium is low, even if doubled.

Viktor Elefant:

I'm thinking the Taj Mahal which was acquired in 1988, which was at basically the peak of his wealth in the 80s (remember the Trump board game - it came out around then). At that point, Trump had already gone from millionaire to billionaire, but the Taj was one of his spectacular failures and bankrupted his business.

Mike Powers:

It is--in an odd way--why I think Trump would be better than Carson.

Trump at least *knows* that everyone hates him and wants him to fail. He *knows* he's gonna have to fight like hell for anything he wants to happen. He *knows* he better have damn good arguments for his ideas.

Carson *knows* that God's on his side, whispering in his ear, and that everything he wants is inherently the proper thing because otherwise God wouldn't inspire him to do it. If you say "hey Ben Carson, I don't think that's a good idea", then you aren't just disagreeing--you're going against God.